Yesterday, our open position in iShares China Xinhua 25 Index ($FXI) surged 3% higher to close at its highest level since May of 2012. It did so after breaking out above a bullish "pennant" formation," which is shown on the daily chart below. More importantly, notice that the breakout occurred on more than double its average volume:



In addition to the breakout in FXI, our position in iShares Poland Index ($EPOL) continued acting well by gaining 0.5% and closing at another fresh 52-week high. Because it's now becoming a bit extended away from near-term support of its 20-day exponential moving average, it would not be surprising to see a modest pullback to the recent breakout level. But even better would be for the ETF to now formed a period of sideways price consolidation ("a correction by time").

When assessing the current chart patterns of our universe of about 300 tradeable ETFs we monitor daily, it continues to be international ETFs, rather than domestic industry sector ETFs, that are showing the most relative strength to the S&P and Nasdaq.

In addition to $EPOL, a handful of other European ETFs have been starting to act quite well. Both the iShares Turkey Index ($TUR) and iShares Austria Index ($EWO) have been surging higher over the past couple days and both ETFs are trading at new 52-week highs. Other European ETFs that have suddenly started seeing positive money flow include Switzerland ($EWL), Italy ($EWI), and Spain ($EWO). Of course, many European ETFs were beaten pretty badly during the Greece debacle, so sharp recovery is not overly surprising.

One could read a lot into the sharp price divergence between the major indices yesterday (an "accumulation day" in the S&P 500, but "distribution day" in the Nasdaq), but doing so may be frivolous because we believe the unusual price action was primarily the result of end-of-year positioning among banks, mutual funds, hedge funds, and other institutions. The market action over the past two weeks has been frustrating, with many leadership stocks stalling at breakout levels or breaking out and failing to hold on to gains. While the long side has not impressive, the market has yet to fall apart, which has equally frustrated the bears.

Since volume in the stock market usually dries up substantially starting the week before Christmas holiday, there is really only just over one week of active trading left this year. As such, our general plan right now is to simply focus on managing existing positions for minimum risk and maximum profitability, rather than aggressively looking for new swing trades to enter at this time. As we regularly remind subscribers, overtrading in a choppy or indecisive market is a surefire way to churn one's trading account.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.